Effective Signals: How Can Firms Communicate Their Strategic Intent in IPO Communications?

Yunxia Zhu
May 2008
Academy of Management Perspectives;May2008, Vol. 22 Issue 2, p106
Academic Journal
The article discusses research into how companies can effectively reveal their business strategies to investors in initial public offerings (IPOs). A study by researcher Gao Hongzhi and his associates that compared prospectuses for IPOs of companies in the biotechnology industry suggested that information on business strategy can serve as a market indicator to guide investors and reduce information asymmetry behind stock transactions. The methods to counter problems related to technology, administration and entrepreneurship were used to categorize firms as prospectors, which can adapt to market changes, or defenders, which require centralization and a stable market.


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